Apple Accused by Egypt of Violating Competition Laws

(Bloomberg) -- Egypt, where an iPhone can cost 50 percent more than elsewhere in the Middle East, has given Apple Inc. two months to end what it claims are unfair restrictions on local distributors -- or face legal action.

The move against the Cupertino, California-based iPhone maker and its regional distributor comes just days after the Egyptian Competition Authority claimed they were violating local law by concluding exclusive distribution agreements.

The authority said that while companies had a right to specify sales areas, local retailers were barred from buying from other distributors, which blocked competition. It voided clauses in the contracts that it said ran counter to competition legislation in the country.

Amir Nabil, head of the ECA, said the authority took action after a two-year investigation of Apple's sales and distribution practices in Egypt. The company's actions are designed to limit competition, Nabil said.

“You shouldn't prevent the customer from being able to choose the better option available to them,” said Nabil. “It's about availability of products. It's also about allowing customers access to better products.”

An iPhone Xs Max with 512 gigabytes storage, for example, costs the equivalent of $1,306 in the U.A.E., while the same phone is listed for the equivalent of $1,983 in Egypt through an authorized Apple reseller.

The decree published in the Official Gazette threatened legal action against Apple and its agent in the Middle East, the United Arab Emirates-based Arab Business Machine. Calls for comment from ABM were routed through various individuals and voicemail systems before being cut off. A message was left with Apple's media relations department in London.

The decree said Apple should “remove any restrictions on the ability of a distributor” to sell products within Egypt, within a period of 60 days.

Nabil said the ECA was following international standards on competition.

“We look forward to their compliance and to removing the clauses that infringe on Egyptian competition law and damage the local market,” he said. “We hope we won't have to escalate.”

To contact the reporter on this story: Tarek El-Tablawy in Cairo at teltablawy@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Amy Teibel, Mark Williams

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